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FIRST LOOK I: NEW ROMNEY AD IN OHIO HITS AUTO BAILOUT - Romney campaign and RNC have a new ad going up ahead of President Obama’s trip to Ohio entitled “Dream”: “In 2009, General Motors, led by the Obama Administration, closed over a thousand auto dealerships across the country. For these small businesses, hope and change was not so kind.” Here is the ad: http://bit.ly/QkNVAu Romney campaign also has a new Web video, “Time for a Change,” focused on Ohio: http://bit.ly/N0BkQS

FIRST LOOK II: NEW PRIVATE EQUITY VIDEO - In its continuing campaign to battle the strip-and-flip stereotype pushed by the Obama campaign against Mitt Romney and his tenure at Bain Capital, the private equity industry’s lobby group has a new video case study out this morning “highlighting leading private equity firm Thoma Bravo’s strategic partnership with Hyland Software, an industry leading software company based in Cleveland.” http://bit.ly/R0xQh6

FIRST LOOK III: FINANCIAL GROUPS OPPOSE CYBER-SECURITY BILL - Per letter going to the Senate today from nine financial trades groups: “The financial services industry, represented by the undersigned organizations, opposes the Cybersecurity Act of 2012 ... While we strongly support efforts to protect the nation’s critical infrastructure from cyber-attacks, this legislation threatens to undermine important cybersecurity protections already in place for our customers and institutions, and misses an opportunity to substantially improve cyber threat information-sharing between the federal government and the private sector.” Full letter: http://bit.ly/N9IHnB

BIG BANK REACT TAKE II - Dem consultant Paul Equale responds to Tony Fratto’s comments in MM yesterday regarding breaking up the big banks: “Yes, for American banks to compete effectively on the global stage it is true that size counts, but we should not forget that the basis of American leadership in global financial services is a regulatory system that creates and maintains investor confidence because of transparency and fairness.

“Money flows to opportunity, but without trust in the system investors will keep their wallets in their pockets. ... A regulatory race to the bottom might temporarily attract the opportunistic investor, but it will ultimately destroy the essential ingredient that makes U.S. financial markets the most trusted in the world.”

OBAMA TALKS TO MONTI - Following on yesterday’s theme of President Obama’s close attention to the European debt crisis, per the White House: “President Obama spoke with Italian Prime Minister Monti earlier [Tuesday], continuing his discussions with European leaders on economic developments in the eurozone. Their conversation follows recent statements by European officials regarding their commitment to preserve the euro. The President has been in regular contact with Europe’s leaders on the state of the European economy, and [Tuesday] he reiterated his support for decisive action to resolve the crisis.”

GEITHNER: TAKE ADVANTAGE OF LOW RATES - Bloomberg: “U.S. Treasury Secretary Timothy F. Geithner called on American lawmakers and European policy makers to spur economic growth even as they seek long-term measures to narrow budget deficits. ‘There’s a lot of things Congress can do, in the near term, not just in the long run, to make growth stronger,’ Geithner said in an interview with Bloomberg Television ...

“Geithner said Congress should take advantage of low borrowing costs to adopt measures to support the economy .. ‘We pay about 1 1/2 percent for a 10-year Treasury now, to borrow long-term now, because fundamentally people have faith in the ability of the U.S. to solve its problems ... It’s sensible for us to take advantage of this moment to do things that will make the economy stronger.” http://bloom.bg/PpfMf9

RATTNER: DON’T BREAK UP THE BANKS - Steve Rattner in the NYT: “[Sandy] Weill’s musings are an ill-advised distraction. Instead of focusing our attention on the worrisome risks that remain, four years after the financial crisis, he diverted attention to a tiresome debate over whether the Glass-Steagall Act ... should be reinstated. ... [T]he bank merger frenzy that Mr. Weill set off in the late 1990s was not the proximate cause of the financial crisis. Nor was the concentration of our banking system, which is less centralized than those in Britain, France, Germany, Italy, Japan, Switzerland and many other countries. What brought our financial system to its knees was old-fashioned poor management that expanded the banks’ portfolios and activities too aggressively without sufficiently robust risk controls, enabled by lax (or nonexistent) oversight by regulators” http://nyti.ms/NIhCNc

TEA PARTY SCORES ANOTHER WIN - POLITICO’s Alex Isenstadt: “And the tea party bash rages on. The storm-the-gates conservative movement that keeps finding ways to stick it to the establishment did it again Tuesday night in Texas, this time propelling the insurgent campaign of an Ivy League-educated son of a Cuban immigrant, Ted Cruz, to perhaps its most impressive victory yet. ... Cruz [defeated] establishment-backed Lt. Gov. David Dewhurst ... ... Once the underdog, Cruz, a constitutional lawyer who had never before run for office, vaulted ahead of Lt. Gov. David Dewhurst, in the final days of the race. Dewhurst, who finished 11 percent ahead of Cruz in the May primary, had long been seen as the prohibitive favorite to capture the seat of retiring Republican Sen. Kay Bailey Hutchison” http://bit.ly/OBbuGg

CFPB GROWING UP FAST - From Compass Point Trading analyst Isaac Boltansky’s review of the CFPB’s semi-annual report: “After reviewing the report, we have three takeaways: Rapid Growth in Number of Employees: From Q1 2011 to Q3 2012, the number of positions filled at the CFPB increased from 58 to 889 ... The CFPB’s Consumer Complaints System Must be Watched: Between July 21, 2011 and June 30, 2012, the CFPB received over 44,000 consumer complaints that it then forwarded to the pertinent companies. Of that total, 26% of the complaints resulted in monetary relief for the consumer. We estimate that the CFPB complaint system has already resulted in $2.1 million of monetary relief.”

GOOD WEDNESDAY MORNING - Welcome to August. Congrats to Michael Phelps for becoming the most blinged out Olympic champion in history. http://bit.ly/QurTOH

** A message from the Investment Company Institute: Heading home for the August recess? Ask your constituents if they want to see radical changes in money market funds. Groups representing millions of individual and corporate, state and local government, and nonprofit investors have a simple message: preserve money market funds. Visit www.PreserveMoneyMarketFunds.org. **

DRIVING THE DAY - Federal Reserve Open Markets Committee makes its big announcement on interest rates at 2:15 p.m. No presser or new economic projections. Consensus is it’s a little too soon for a QE3 announcement but it’s not out of the question. An extension of the “exceptionally low” guidance into 2015 is expected ... ADP private employment report out at 8:15 a.m. expected to show a gain of 120K but it may not mean much as the ADP number missed BLS non-farm payrolls by nearly 100K last month ... ISM manufacturing at 10:00 a.m. expected to come in at 50.2, just over June’s extremely weak 49.7 ... President Obama campaigns in swing state Ohio with events in Mansfield and Akron ... Romney returns to the U.S. after an up-and-down (probably a bit more down) trip to the Britain, Israel and Poland ...

House Small Business Committee has a hearing at 1:00 p.m. with CFPB Director Richard Cordray examining the agency’s impact on small businesses ... Senate Finance has a hearing at 10:30 a.m. on the tax treatment on business entities ... Senate Commerce has a hearing at 2:30 p.m. on the sales tax exemption for online retailers ... Senate Agriculture has a hearing at 10:00 a.m. on the MF Global and Peregrine failures featuring CFTC Chair Gary Gensler. WSJ reports trustee Louis Freeh will say MF Global customers will eventually be made whole (more below)

TOP STORY: DeMARCO SAYS NO TO DEBT FORGIVENESS - NYT’s Binyamin Appelbaum on pg. B1: “The independent federal agency that administers Fannie Mae and Freddie Mac said ... it would not let the mortgage companies offer debt forgiveness to borrowers, again rejecting the entreaties of the Obama administration. The [FHFA] ... said it had concluded after months of study that up to half a million homeowners could benefit from such a program, and that taxpayers might save $1 billion because aid recipients would be more likely to continue making mortgage payments. But the agency’s acting director, Edward J. DeMarco, said the benefits most likely would be much smaller — too small in his judgment to offset potential costs, including the risk that some borrowers would stop making payments in pursuit of a better deal ... The announcement is a direct rebuff to the Obama administration” http://nyti.ms/MxKfIu

GEITHNER RESPONDS - From Treasury Secretary Tim Geithner’s letter to DeMarco: “I am concerned by your continued opposition to allowing Fannie Mae and Freddie Mac ... to use targeted principal reduction ... I do not believe it is the best decision for the country, because, as we have discussed many times, the use of targeted principal reduction by the GSEs would provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market, and result in a net benefit to taxpayers ... FHFA’s own analysis ... has shown that permitting the GSEs to participate in the Principal Reduction Alternative program ... could help up to half a million homeowners and result in savings to the GSEs of $3.6 billion compared to standard GSE loan modifications” http://1.usa.gov/OlsIne

BANKS LIKE IT - Bob Davis, ABA executive vice president of mortgage policy: “We appreciate FHFA’s prudent and thoughtful approach that considered the full costs and benefits of principal reductions. Assisting troubled borrowers and encouraging recovery in the housing market is extremely important, yet, there are more cost-effective and efficient options that carry fewer unintended consequences ... [P]rincipal reductions do not measurably help troubled borrowers avoid foreclosure, yet increase the cost to taxpayers at a time when our nation’s fiscal situation is already strained”

HINDERING THE RECOVERY? - Bloomberg’s Deborah Solomon: “DeMarco finally slammed the door on hundreds of thousands of beleaguered homeowners ... In doing so, DeMarco clearly put ideology ahead of economics, hindering the housing market's recovery in the process ... Treasury has offered various incentives to encourage principal reduction, including paying Fannie and Freddie as much as 63 cents for every dollar of principal they forgive. That makes the program not only affordable but lessens losses for the companies, which continue to be backed by U.S. taxpayers. Even after deducting Treasury's incentives, the FHFA analysis shows the program saves the mortgage financiers as much as $1 billion” http://tinyurl.com/crylbfq

OBAMA AIRPORT FLAP - Columbus Dispatch’s Jessica Wehrman: “Ohio Republican lawmakers are grumbling about ... Obama’s decision to fly into Mansfield Lahm Airport ... the same airport that houses an Air National Guard Base the president has proposed shuttering. Obama this year released a budget that would cut Air Guard bases around the country and eliminate the 179th Air National Guard Wing in Mansfield - cuts that lawmakers say would also eliminate 800 jobs.” http://bit.ly/Qcdi8f

CONGRESS MAKES THE DEAL! - POLITICO’s Manu Raju and Seung Min Kim: “Something strange happened in Congress on Tuesday: Leaders of both parties cut a drama-free budget deal, won immediate bipartisan support and did this all two months before deadline. It may only be a six-month resolution to keep the government funded. But the fact that congressional leaders came together so quickly showed that neither party wanted to relive the pitched political battle ... that have defined this divided Congress the past two years. ... Congress must still deal with hugely consequential fights over the lower tax rates set by the Bush administration and $1.2 trillion in defense and domestic spending cuts, but removing the specter of a federal government shutdown gave both parties relief”

UH OH: CHINA SLOWS - FT’s Simon Rabinovitch in Beijing: “China’s manufacturing sector deteriorated slightly in July, confounding expectations for a recovery as the government steps up support for the weakening economy. The country’s official purchasing mangers’ index, an important gauge of industrial activity, inched down to 50.1 in July from 50.2 in June, just above the 50 line which separates expansion from contraction. ... Analysts had been looking for a slight increase in the PMI after the government cut interest rates and encouraged banks to lend more after economic growth in the first half fell to its lowest in three years. Yet these moves appear to be struggling to gain traction. Wen Jiabao, the premier, warned on Tuesday that people should not underestimate the risks that the Chinese economy is facing ... ‘Downward pressure is still relatively big,’ Mr Wen said” http://on.ft.com/QupL9E

MF GLOBAL HAPPY ENDING? - WSJ’s Devlin Bartlett and Aaron Lucchetti on pg. A1: “A bankruptcy trustee sifting through the remains of MF Global Holdings Ltd. expressed confidence that the failed securities firm's U.S. customers will get all their money back. In written testimony submitted to the Senate Agriculture Committee ... trustee Louis J. Freeh said farmers, ranchers, traders and other investors still owed an estimated $1.6 billion ‘eventually will be made whole,’

“A full recovery for MF Global customers might ease the criticism that has dogged Jon S. Corzine, the former New Jersey governor and Goldman Sachs Group Inc. chairman who became chief executive of MF Global in 2010. Still, Mr. Corzine and other top executives could face charges if prosecutors and regulators decide that they willingly endangered customer money” http://on.wsj.com/PoLetV

NEW SANCTIONS ON IRAN - CNN’s Jamie Crawford: “Obama announced new U.S. sanctions targeting Iran's oil Tuesday as well as banks in China and Iraq, warning that Tehran faces ‘growing consequences’ for refusing to answer international questions about its nuclear program. Obama said China's Bank of Kunlun and the Elaf Islamic Bank in Iraq ‘facilitated transactions worth millions of dollars’ for Iranian banks already under sanctions. ... On a conference call with reporters Tuesday, Ben Rhodes, deputy national security adviser for strategic communications, said the purpose of additional sanctions was to ‘affect Iran's calculus’ to get Tehran to negotiate seriously over its disputed nuclear program.”

ALSO FOR YOUR RADAR -

THE DeMINT ROAD BLOCK - POLITICO’s Patrick Reis: “In the ongoing cold war over financial reform, even the least controversial bills can get crushed when caught up in Congress’s partisan divide. Such is the case with a measure aimed at providing more legal protection to information banks surrender to the [CFPB]. The bill has near universal backing in Congress and the support of the Obama administration, but Sen. Jim DeMint (R-S.C.) is blocking the measure to gain leverage for a floor vote on repealing ... Dodd-Frank ...

“The banking industry was hopeful the bill had been freed from legislative purgatory a few weeks ago when Sen. Bob Corker (R-Tenn.) lifted his objection ... and it appeared the tweak could squeeze through Congress this year. But DeMint ... stepped in shortly thereafter to erect his own roadblock. While DeMint doesn’t necessarily oppose the bill’s goal, he thinks Dodd-Frank is too flawed to be fixed ‘one piece at a time’ and is in need of repeal, his spokesman Wesley Denton said” http://bit.ly/PoJz7J

BOARDS WITH WOMEN BOOST RETURNS - Bloomberg’s Heather Perlberg: “Companies with women on their boards performed better in challenging markets than those with all-male boards in a study suggesting that mixing genders may temper risky investment moves and increase return on equity. Shares of companies with a market capitalization of more
than $10 billion and with women board members outperformed comparable businesses with all-male boards by 26 percent worldwide over a period of six years, according to a report by
the Credit Suisse Research Institute ... The number of women in boardrooms has increased since the end of 2005 as countries such as Norway instituted quotas and companies including Facebook Inc. added female directors after drawing criticism for a lack of gender diversity” http://bloom.bg/MQXc4F

NEW GSA TUMBLR - Bankrupting America has a new Tumblr poking fun at alleged waste and abuse at the GSA” http://goo.gl/S0V4x

TWITTER UNDER FIRE - FT’s Richard Waters in San Francisco and Emily Steel in New York: “Twitter has admitted that a commercial relationship with NBC played a central part in its censorship this week of a user who had criticised the US broadcaster’s coverage of the Olympics. The disclosure that the company’s own business interests had led to the controversial censorship decision brought a torrent of critical tweets ... making the case a prominent test of Twitter’s ability to build a profitable business without undermining its self-declared status as one of the web’s most open platforms ... ‘If we cannot rely on Twitter to protect our free speech, then it is no platform at all,’ tweeted Jeff Jarvis, a journalism professor at the City University of New York” http://on.ft.com/NIaL6y

** A message from the Investment Company Institute: During the recess, members of Congress should ask investors whether they want the radical changes that the Securities and Exchange Commission is considering for money market funds.

More than 56 million individuals and thousands of corporate, state and local government, and nonprofit treasurers depend upon the stability, convenience, and liquidity of money market funds. And the $2.5 trillion invested in money market funds supports:

JOBS-financing payrolls and inventories

COMMUNITIES-funding public projects like roads, hospitals, and low-income housing

CONSUMERS-financing home equity, auto, and credit card loans

Preserving the stable $1.00 value of money market funds and ensuring that investors have 100 percent access to their cash is vital to protecting these funds' crucial role in the U.S. economy.

Listen to the voices of the economy and the answer is clear: preserve the value of money market funds.